Shelby’s Folly: Why Shuttering the Ex-Im Bank Was Among the Dumbest Political Moves Ever

Loren B. Thompson

Export-Import Bank, United States

"Today marks the anniversary of one of the dumbest moves ever made by political zealots in Congress." 

Today marks the anniversary of one of the dumbest moves ever made by political zealots in Congress.  Last year, a misguided minority of House Republicans succeeded in shutting down the Export-Import Bank, making America the only major trading nation without a functioning export credit agency.  James Madison warned about the mischiefs of faction in Federalist Number 10, and unilaterally disarming America’s export machine is precisely the sort of foolishness he had in mind.  Fortunately, a bipartisan majority of 313 Representatives and 67 Senators defeated the ideologues in December and Ex-Im is now back in business.

Except for this: Senator Richard Shelby (R-AL), Chairman of the Senate Banking Committee, is refusing to let his committee confirm a third appointee to Ex-Im’s board — which means it lacks the quorum needed to approve financing for deals worth more than $10 million.  Shelby calls Ex-Im financing “corporate welfare” even though the agency doesn’t spend a cent of taxpayer money and in fact makes a profit each year off of the fees it charges foreign customers for using its services.  The main reason Ex-Im exists is to help private lenders finance export deals with countries that have high risk profiles in places like Africa and Latin America.

Apparently nobody has told Senator Shelby that there are 85 export credit agencies operating around the world, and that without such an agency in Washington to level the playing field, thousands of American companies would be hard-pressed to compete in foreign markets.  China commits at least ten times as much money as the U.S. does to helping its companies sell abroad, and its export credit agencies function with far fewer constraints than America’s does.  That is one reason why the U.S. had a trade deficit of $60 billion in May — an imbalance that is cutting a full percentage point off the nation’s economic growth rate.